More compensation payouts to be issued by Halifax

High Street banking giant, Halifax, has recently admitted that it may have to pay out more compensation to customers over a mix up with its mortgage rates. Earlier this year the lender identified around 600,000 customers who may be eligible for compensation over confusion about mortgage rates, about half of whom ended up receiving compensation payouts. The lender has now stated that there could be another 250,000 people who may be eligible with around half of them expected to actually receive compensation.

The compensation that the lender pays out could be up to £4500 per person based on a mortgage of £150,000 where the borrower has been affected for three years. The payouts will equate to either 1 percent of the mortgage interest for each year that the borrower has been affected or will be a fixed compensation payout. With tens of thousands of borrowers potentially set to receive compensation, Halifax could have another huge bill on its hands.

The confusion has arisen over Halifax increased the cap on its standard variable rate mortgages from 2 percent above the Bank of England base rate to 3 percent above. The UK’s financial regulator, the Financial Services Authority, expressed concern that wording on documentation may have led borrowers to believe that they would receive advance warning of any such changes. Halifax subsequently came to an agreement with the FSA over paying compensation to customers who were affected.

A Halifax official said: “In February 2011, we agreed a voluntary agreement with the FSA in relation to a customer contact and goodwill payment programme with specific Halifax mortgage customers. We have subsequently identified a further group of customers that are eligible for inclusion within the programme. We are now in the process of writing to these borrowers explaining what this means for them.”

Tags: bank of england, lender, tens of thousands, goodwill, Halifax mortgage customers, Street banking giant, customers, standard variable rate

RBS to close many insurance offices

It has been announced that Royal Bank of Scotland is being forced to close half of its insurance offices. This comes after the taxpayer bailout that resulted in the company being forced to sell its Churchill and Direct Line insurance divisions. Under the plans there will be two thousand jobs axed at the division, as the lender prepares to sell its insurance business.

Glasgow will see two offices being closed, causing the loss of over six hundred jobs. There are also closures expected in Peterborough and Bristol, which will see another six hundred jobs go. Union officials are angry about the measures because they blame the loss of hundreds of jobs on the failures of the bank, which was one of those that had to be bailed out using taxpayer’s money.

The global credit crisis caused the near collapse of the banking system in the UK, and whilst the troubled Northern Rock was the first major victim of the financial crisis in the UK, and had to be nationalised after it became the first victim of a run on a British bank in a century and a half, a number of other big name High Street banks ended up following its footsteps.

Whilst it is taxpayer’s money that has resulted in the bank being bailed out lenders are still being very cautious when it comes to providing finance to consumers and businesses, which has already caused a lot of controversy. The loss of jobs resulting from these RBS closures will now cause more controversy, as the blame has been laid squarely at the feet of the bank itself by union officials.

Union Unite official Rob MacGregor said: ‘RBS staff are continuing to pay the price for the bank’s failure with their jobs.’

Tags: direct, Insurance, Royal Bank of Scotland Group, British bank, rob macgregor, lender, finance, insurance divisions

Northern Rock cuts its repossession numbers

The nationalized mortgage lender Northern Rock has recently announced that it has managed to cut its mortgage repossession numbers as a result of the housing boom seen over the summer period. The bank has also seen stabilisation of the number of mortgage customers on its books that are in arrears with their mortgage repayments. Read more

Tags: northern rock, temptation, taxpayer, lender, result, northern rock repossessions, general election, repossessions

Rate Matcher customers charged increased arrangement fees

Back in April of this year the high street lender HSBC announced the launch of a new mortgage product designed to help homeowners who were on cheap fixed rate mortgages that were due to come to an end. The bank promised to match the current interest rate of those on low rate fixed mortgages with any other lenders, which meant that homeowners whose cheap fixed rate mortgages were due to end would not have to worry about going onto a high standard variable rate. Read more

Tags: arrangement fees, Matcher, Mortgages, idea, chancellor of the exchequer

Your 100% savings guarantee could cover the first £50,000

Until late last year the government operated a savings guarantee of 100% on only the first couple of thousand pounds of a savers’ money deposited in a bank or savings account. However, the crisis surrounding the stricken bank Northern Rock changed all this. Following the onset of the global credit crunch Northern Rock, which was then the fifth largest mortgage lender in the nation, ran into massive funding problems and had to take an emergency loan of billions of pounds from the Bank of England. Read more

Tags: deposit, good news, relief, lender, savings, Nationalisation of Northern Rock, uk, money

Payment Protection Insurance For Loans

Every year many people in the UK take out a loan in some form or another, whether it is a secured loan that is secured against the home or whether it is a contract based unsecured loan. And for most of us the thought of not being able to meet repayments on the loan one day never really crosses our minds when we are actually taking out the finance. However, there are many unforeseen circumstances that could result in the borrower being unable to meet repayments on the loan, and this could lead to severe consequences, particularly in the event that the loan is a secured one. Read more

Tags: missed repayments, credit, severe consequences, contract, lender, ppi, Loans

Government help for mortgages “too slow”

The government should act more quickly when providing aid for mortgages to people in financial difficulties facing repossession, says National Homebuyers. Read more

Tags: mortgage lenders, Mr Coogan, mortgage payments, economic conditions, lender

Bank highlights major UK protection deficit

There is a £2.3 trillion protection gap in Britain, Sainsbury’s Bank said yesterday.

According to the high street bank, many people do not take out life cover with their mortgages and this is largely contributing to the deficit.

Clare Moyles, a spokesperson for the bank, said: “Anybody aged 18 plus with a family really needs to be thinking about protecting their family and protecting their mortgage.”

She added that it was not a priority on many people’s “agenda”.

The Association of British Insurers recently found that one in every three Brits is without life insurance and the same figure are uninsured through not renewing life cover for five years.

Furthermore, it revealed that between 2005 and 2006 people paid £41,168 million on life insurance premiums and £45,469 million on life insurance benefits.

Sainsbury’s Bank recently advised young people to shop around beyond their mortgage lender for a better deal on life insurance to avoid losing out on significant savings.

Tags: Bank highlights, lender, Sainsbury's Bank, Types of insurance, Association, Insurance, Sainsbury, mortgage lender

BOE governor warns on borrowing and lending

The Governor of the Bank of England, Mervyn King, has stressed the importance of consumers being careful not to borrow money that they cannot afford, and lenders being more careful about who they lend money to.

Mr King stated that consumer debt levels in the UK could lead to a major debt crisis. And with another interest rate rise due in July – which will be the fifth interest rate rise since last August – many more people in the UK could find themselves struggling with unmanageable debt.

Speaking at the Mansion House Banquet in London, Mr King addressed families and individuals, stating: ‘be cautious about how much you borrow’.

He also addressed lenders stating: ‘be cautious about how much you lend’.

At last month’s Monetary Policy Committee meeting Mr King actually voted for a quarter percent rise in interest rates, but the majority vote was to keep interest rates stable in June. However, this month’s meeting is likely to see a different result, and a further quarter percent rise is widely predicted.

At the dinner – also attended by new Prime Minister Gordon Brown – Mr King stated: ‘Be cautious about how much you borrow is not a bad maxim for each and every one of us here tonight.’

He also addressed lenders, adding: ‘Excessive leverage is the common theme of many financial crises of the past. Are we really so much cleverer than the financiers of the past?’

One LibDem spokesman said: ‘A combination of an economic slowdown and higher interest rates could spell disaster for large numbers of heavily-indebted families. If interest rates rise further, many home owners will simply not be able to pay.’

And the Shadow Chancellor added: ‘Millions of people are struggling as the cost of living is rising faster than their incomes.’

Tom Smith
9th July 2007

Tags: lender, england, afford, loan, borrow, rise, interest